GREEK DEAL FAILS TO CONVINCE

Despite new austerity plan, European officials want more cuts before releasing bailout funds

Hours after debt-ridden Greece made the unpopular decision Thursday to slash government spending in an attempt to secure an international bailout, European finance ministers held back, indicating they first wanted to scrutinize the debt write-off deal and austerity commitments that Athens was offering in return.

In a sign of the sheer size of Greece’s challenges, European officials said the measures were not enough to send over the $170 billion rescue package, and they insisted more steps be taken even as Greeks say they are reaching their pain limit.

A successful fiscal plan for Greece that satisfies international lenders and private investors holding Greek bonds would remove a major risk to the world economy. The country has been edging near a default on its bond payments, which could have fearful consequences for world financial markets.

European officials set a Wednesday deadline for the Greek Parliament to approve cuts and find $432 million more to trim from this year’s spending. Greece’s main political parties must agree publicly that the promised measures will be implemented. And private creditors will still need to reach a deal to take billions of dollars in losses. Only then would European Union leaders sign off on the overall package. It would be the second bailout for Greece in two years, bringing the total public bill well past $300 billion.

“After a long, tough period of negotiations, we have finally a staff-level agreement,” said Greek Finance Minister Evangelos Venizelos, on his way to an emergency, closed-door meeting in Brussels, Belgium, with European finance ministers. But European officials said the deal is not yet complete.

German Finance Minister Wolfgang Schaeuble, representing the country that is contributing the most money to the Greek bailouts, put it bluntly. “Greece has to implement what it has not implemented from the first program before we can decide on a second,” he said.

The IMF and European officials have become frustrated over the inability, or unwillingness, of Greece’s political leaders to follow through on promised economic reforms. Especially in Germany — Europe’s largest, richest economy and the main contributor to any bailout — politicians appear increasingly willing to contemplate a Greek default, which would reverberate through the international financial system.

In Greece, where unemployment has spiked to 20.9 percent and is 48 percent among those under 25, some of the demands from the three-headed team of the International Monetary Fund, the European Union and the European Central Bank seem to Greeks more like a series of mythological challenges than attempts to improve their economy’s standing.

Under a preliminary draft of the agreement, minimum wages, currently about $1,000 a month, would drop to $780, and even less for those under 25. Health care spending would contract. Other social welfare payments would be cut, and 15,000 public-sector workers would be laid off by the end of the year, followed by 135,000 more by 2015. Many of the country’s biggest state-owned companies are slated to be sold off in the next few years to raise money, open up parts of the economy previously under state control and loosen regulations on who can join certain professions, among other things.